Ilnur SAGDIYEV: Kazankompressormash is the best that there is in the Russian compressor manufacturing"

IA "Tatar-inform", 3 June 2015

Traditionally, all major companies summarize the past year. What this year was for JSC Kazankompressormash told news Agency "Tatar-inform", the managing Director of the plant Ilnur Sagdiyev. Ilnur ildarovich, how do you assess the results of 2014?

I. S.: As you may remember, last year was very difficult for the entire Russian economy, which was under the influence of a number of negative factors, such as the Western economic sanctions against Russia, the sharp drop in oil prices, a rising dollar and interest rates on Bank loans. All this has created a situation of uncertainty and, I would even say, nervousness, when many large companies, acting perfectly logical and commensurate with the existing risks made the decision not to start or to slow down the implementation of some major projects, particularly in industries associated with the extraction and processing of oil and gas.

We, as a company that manufactures unique processing equipment, fully dependent on the needs and requirements of our clients. If the customer in this situation cancels or postpones the tender for the purchase of equipment, for us it means only one thing: loss of ability at the moment to win this tender, receive and due execution of the order. As a result, sales volume for 2014 was insufficient to cover all costs of the plant, and we ended the year with negative financial results: EBITDA under IFRS reporting was minus $ 255 million rubles.

And yet, overall, 2014 was not entirely lost: in the second half we used all opened due to the devaluation ruble opportunities that together with the reorientation of many consumers for domestic products has allowed us to build a portfolio of orders for the beginning of 2015 in the amount of 3.2 billion rubles (including intra-group supplies), and in the first quarter of this year we have added to it new orders for another 640 million rubles. Thus, we have every reason to believe that this year will be more successful in terms of the final financial performance.

it's been two full years since that moment when the plant changed owners. What would you call the undoubted success of the new team, came to the factory at the end of 2012?

I. S.: it is No exaggeration to say that the new team, which I joined relatively recently, during this time, the work was enormous. First of all, was developed and approved the new strategy of the enterprise in which the most detailed articulated our goals and ways to achieve them in a clearly defined time frame. In accordance with the strategy initiated update of product lines, centrifugal and screw compressors, the company started to enter the market complete gas compressor units. Tangible effect start to bring those investments that were implemented in order to accelerate the production and technological development of the enterprise. And, of course, the most, in my opinion, the main achievement is that during those two years we managed to restore the trust of many of our consumers, which under the previous management of the plant was beginning to doubt the capabilities of the enterprise to produce high quality equipment. We have proved that Kazankompressormash is the best that there is in the Russian compressor manufacturing, and thus attracted a significant number of new customers.

You could call these new for enterprise customers?

I. S.: It may sound surprising, but this client is primarily Gazprom itself, which after a long enough period of difficult relations returned to the main customers of our company, and today we participate in a number of projects of Gazprom as a supplier of compressors and compressor units, the proposed options for upgrading the equipment of other manufacturers, including foreign ones. Along with such companies as Rosneft, LUKOIL, NOVATEK, we started to work also with "Bashneft", "Slavneft", Irkutsk oil company, and of course expanding cooperation with JSC "Tatneft" and, in particular, with its subsidiary company "TANECO" for which in may we shipped three compressor units for the complex of refining and petrochemical plants.

What have you accomplished your team in terms of improving the efficiency of the enterprise?

I. S.: First of all, we strive to improve the quality of management while reducing expenditures. Administrative expenses during the past year we managed to reduce by 23 percent. We optimized the structure of the enterprise, reduced inefficient units and introduced new solutions for new and demanding tasks, such as managing complex projects. Thanks to the organization more well-coordinated work of all departments were able to reduce the time of execution of orders on average 1 month, and we are not going to stop. As a result of improving the quality of the manufacturing at all stages of the process dramatically reduced the number of complaints about the quality of the end product and, accordingly, minimized the volume of complaints made by customers.

What new developments you have already mastered and what consider for the future?

I. S.: In 2013 Kazankompressormash together with "Naturvetarna the V. B. Economies" began working on the project to create a modular compressor units of the new generation type of takate, meeting the needs of customers, and in 2014 were released pilot samples of these units, which were set at Bashneft and Gazpromneft.

Currently forces "Naturvetarna" we began developing a new line of screw compressors. The implementation of this programme will expand the product range on the performance of a single compressor to 140 m3/min and working pressure to 50 kg/cm2.

In the development of centrifugal compressor units in 2014, the plant together with "Naturvetarna" has begun to develop a new generation of cars. Under this program provides a unification of decisions on external enclosures, covers and shafts of compressors. Maintained and develop new vysokoriskovyh spatial working wheels with extended sleeve. The implementation of this project will help raise the level of technical solutions Kazankompressormash one level with companies such as Dresser-Rand, GE and Siemens and improve the performance of the existing number of machines by 30-50%. The first phase of work, including the development of prototypes, is scheduled for completion next year.

In 2014, work continued on the development and production of complete gas compressor units (GCU) and compressor stations. This work was designed, produced and delivered the first complete history of the plant HPA 25 MW driven by a gas turbine engine and a steam recovery boiler. This solution is unique in the modern history of the Russian mechanical engineering, and currently GPA is in the process of installation at the customer site.

For the production of new equipment you will need new machines and technologies. What are the investment plans of enterprises?

I. S.: When entering the company of the GMR Group was approved today and is large investment program. It includes four major areas: the first is the modernization of the foundry and blanking of redistribution, in which at the moment is spent preparing the facilities for the installation of new equipment for casting technology CTS and waterjet cutting. Installation and putting the equipment into operation, we plan to complete this year.

The second is the renewal and expansion of technological possibilities of production of centrifugal compressors. In the framework of this direction have already been commissioned vertical turning and milling machining centre "Doris" for the complex machining of housings and covers, worth more than € 2 million. Will further acquired another 10 high-precision machine tools.

The third is the renewal and expansion of technological possibilities of production of screw compressors. Here we have focused on the unique technology to produce the spiral surfaces, and in our nearest plans include the purchase of the grinding center value of more than EUR 2.5 million, as well as machining center for body parts.

The fourth area is the further development of our assembling. Here at the scheduled increase in the program of output of complete compressor stations on the basis of screw and centrifugal compressors planned capital construction of about 10 thousand square feet of new production space. Also coming soon will be procured and installed a large painting booth and sand blasting chamber. Current and future plans involve investments of up to $ 1.5 billion roubles until 2020.

For funding of your programs and projects you are working only with Moscow banks or appeal, and in our Kazan banks? And if Yes, then find whether there is support for their initiatives?

I. S.: In December of last year at their own expense, we repaid the line of credit of the savings Bank of the Russian Federation on 700 million rbl. and is now actively expanding collaboration with the Kazan banks. For example, the Bank "timer" (01.04.2015 to G. BTA Bank) has provided a loan of 300 million rubles and several Bank guarantees for performance of contracts with JSC "Tatneft".

In 2014 we began a collaboration with the Kazan Bank "AVERS", which in March this year provided us with a short term loan of 200 million rubles for working capital, and in may we already repaid at the expense of revenue. Currently, active work with the "Bank of Kazan", which also discusses the involvement of credit under our new projects. Negotiations are underway with other regional and Federal banks.

Kazankompressormash was always known for his strong social policy, care about people. What is the average salary level in the company and if you are not planning layoffs?

I. S.: On The Contrary. We are in constant need for more highly skilled workers in various specialties and involved in the work, to us such specialists, because the production volume is currently increasing. We especially need workers and engineers specialties such as turners, turners-rastocny, millers, engineers, technologists and designers. The average salary of employees payroll grew in 2014 by 17.4% and amounted to 29 thousand rubles. Average wage of workers exceeds 33 thousand rubles, and the maximum salary of the most highly skilled workers up to 75 thousand rbl. It is not yet such large numbers, as we would like, but we are doing everything we can to between his labor and his payment was the most that neither is a direct connection, improving in this direction the wage system. Therefore, those workers who can and wants to be a workaholic, able to secure a decent wage.

As a new owner and a new team formed relationships with the leadership of the Republic and the city? Do you engage them for help, and they to you?

I. S.: of Course, Kazankompressormash as one of the largest enterprises of the Republic has always been in very close contact with the presidential Administration and the Government of the Republic of Tatarstan. With the arrival of HMS Group, these relations have moved to a qualitatively new level, and we are now among the key enterprises that form, I would say, the face of the Republic in relations with other regions of Russia and foreign States.

Between Republic of Tatarstan and the GMR Group, the strategic partnership agreement is successfully implemented, our company fulfills all obligations, actively supports social and sports projects of the Republic and of the city and the Republic, in turn, contributes to the effective operation of the company in the region.

Thanks to built in the Republic effective industrial policy, part of which is the establishment of mutually beneficial cooperation ties between enterprises of Tatarstan, we with the direct support of the acting President of the Republic of Tatarstan Rustam Minnikhanov and Prime Minister Ildar Khalikov has achieved notable progress in building strategic partnership with OAO "Tatneft", JSC "Kazan motor building production Association (KMPO)", as well as with a number of other companies that are consumers of our products or suppliers for cooperation.